THE 20TH ASIA CONSTRUCT CONFERENCE

13- 14 November, 2014

HONG KONG

Prepared by

Eng. S K S Amarasekera (Director – Development)

Institute for Construction Training and Development (ICTAD) “Savsiripaya”, No. 123, Wijerama Mawatha, Colombo 07.

Telephone : 94-11-2686089, 94-11-2699801 e-mail : ictadch@sltnet.lk website : www.ictad.lk

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CONSTRUCTION INDUSTRY RESOURCE REQUIREMENTS

Abstract

In Sri Lanka, the construction industry is in an upward trend and therefore it has become an

attraction among all local and foreign investors. With the end of the ethnic conflict, the

situation supports a sustainable economy and resulted in lots of infrastructure construction

developments. Many number of construction activities are now implemented, especially in

the North-East area. In meeting the above goals, numerous challenges that are to be overcome

have been identified. The industry concerns rally round shortage of skilled craftsmen, high

raw material costs, lack of availability of funds, lack of lands for housing in urban &

suburbans, low supply of quality materials and standards, specifications, frequent changes in

legislation, lack of development plans etc. At the same time competition of other Asian

countries to hunt the foreign investment opportunities resulting low FDIs, reluctance in

sharing latest technical innovations by them and migration of construction workers, generate

certain threats to the industry. In addition to above, lack of information on construction

industry of Sri Lanka, non-availability of best practices of procurement strategies, and

globalization of construction industry also have become issues to be addressed.

Therefore, it is required to establish suitable preventive and corrective actions to enhance the

sophisticated levels to ensure the availability of key industry resources for the betterment of

the construction industry of Sri Lanka. This paper discusses four main challenges identified

and issues to be addressed by the Sri Lankan construction community to take necessary pre

arrangements such as development plans.

1.0 Background

Sri Lanka is an island country located approximately 32km away south easterly of India and

at the tip of the Asian Continent, with a land area of 65,610 square km (sq.km). In 2013, the

country had an estimated population of 20,483 million with an annual growth rate of 1 per

cent. Since its independence in 1948, Sri Lanka had remained unstable politically and

socially because of a long civil war and terrorism between the majority group of Sinhalese

(75%) and the minority group of Tamil (15.4% Sri Lankan & Indian Tamil) until the 25-year-

long domestic strife ended in May 2009.

With the aim of sustaining over 8 per cent GDP growth rate in the next 10 years, the

Government of Sri Lanka has laid emphasis on less developed regions, rural livelihood,

infrastructure and reconstruction in all over the island focusing more on conflict zones which

underwent a devastation during the 30 year old ethnic unrest. Several plans and strategies

announced by the Government indicate that the country’s construction industry is poised for

significant growth because of investments in sectors such as power, roads, ports

transportation, housing, tourism and reconstruction.

It is estimated that the construction industry is the 3rd largest industry in the country.

However, the recent past has seen this industry going through a lot of dynamic changes.

These changes reflect the aspirations of the private sector to promote the construction

industry as a properly regulated industry, and the government’s efforts, to promote and

regulate the growth of the construction industry. The end of the island’s ethnic conflict in

2009 has revived the economic activity and resulted in a strong focus on infrastructure

development. The country’s construction industry contributes to about 8 % to the country’s

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GDP, with growth since 2003. In 2014 1st quarter, Sri Lanka’s construction industry recorded

a growth rate of 22.5 % as compared to 5.6 % in 2009. Its contribution to the GDP was about

LKR 890 billion, at current prices.

Acceleration of ongoing projects such as for development of power sector including mega

projects, road development including expressways and port city developments is likely to

generate large demand for companies in the construction industry. This upsurge is attributed

to the freedom for growth experienced by all sectors in the country resulting from the

eradication of terrorism. In this post-conflict situation the long suppressed buoyancy of the

construction sector was released and it was able to record many important milestones. In the

economic front, the per capita income was doubled over the last five years to US $ 2,900 per

year, graduating the country to the middle income category of countries with an emerging

market economy. The spare construction capacities and resources in some bigger Asian

countries such as China & India have been directed to stable countries like Sri Lanka

contributing heavily to the capital influx in this country. The property boom and large

investments in infrastructure projects across the country grew out of this backdrop. With

strong capital inflows, prevailing deregulatory policies, globalization of capital markets, such

construction bursts are inevitable in investor hospitable countries. This trend is more common

in the leisure cum tourism sector, attracting global big time investors to friendly investing

environments.

The property development sector which is presently quite dynamic, can be expected to

continue to experience this boom due to the unfulfilled demand. This volatility however may

diminish in the future with supply meeting the demand. Nevertheless there is growing

evidence that economic recovery had entered a more positive phase from the first and second

quarters of 2010 and was able to sustain building foreign investor confidence. The growth of

the economy remained strong, averaging 7.5 per cent per annum, during the period 2010 to

2013.

1.1 Development Plans in Construction Sector

Some construction projects implementation performance has not been up to expectations

reflecting slow progress. This shows some implementation problems which are attributed to

procedural delays and lack of coordination on the part of public sector executing and

implementing agencies. Therefore it is necessary to strengthen the project implementation

and monitoring capacity of Sri Lanka.

Weak monitoring and evaluation, project ownership, capacity of the executing and

implementing agencies, social and environmental resistances, delay in loan effectiveness,

procurement and use of consultants, annual budget and release of counterpart funds,

delegation of authority, political interference and inadequate communication coordination

and civil unrest, land acquisition and re-settlement related issues are the key underlying

causes contributing to delays in project implementation. These general problems, which are

common to most regional countries, have adversely affected the implementation

performance of projects. Effective monitoring and evaluation systems, with early warning

signals and alerts to the project management and concerned decision makers, will enable

timely corrective action, avoiding time and cost overruns.

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Therefore, it is required to pay attention on development plans that sets out the development

goals and objectives of the construction industry as identified by the government and a

strategy for achieving these development goals and objectives.

2.0 Industry Resources

Construction Industry resources are identified as inputs that are used in construction of

infrastructure facilities, housing, public buildings and utility facilities. The main resources are

identified as;

(1) Human resource

(2) Construction Materials and components

(3) Technology development

(4) Investment

In Sri Lanka, the tantalizing issues concerning the resource usage are lopsided towards

Human Component of the sector. Although there are sufficient skills development avenues

generously funded by GOSL and other Donor Agencies, the attraction towards the Industry

has painted a bleak picture continuously indicating a vigorous downturn in meeting local and

foreign demands.

Lack of regulations in supply chain network of construction material and components and

due to the quite slow nature of introduction of innovative materials and construction methods,

etc, to the industry, have been inimical for a true dynamism in the industry. Slow growth in

technology transfers in FDIs and other Donor Funded projects has reduced equitable sharing

of global technological advances and their applications in raising the standards of the

industry. Influx of foreign labour and deployment of expatriates for funded projects have

equally contributed to confounded domestic conjunction.

In addition, there has been no strategic consideration in mitigating environmental impacts to

the industry conceptualizing the entire world as a single global village maintaining cordial

relationships among the regional countries in the least. In combating the threat of climate

change, many nations in the region are operating in a similar paradigm and developing

countries are less committed to share their resources. In this context, Sri Lanka stands in a

low profile to reap the benefits.

Lending small and medium Contractors and entrepreneurs in the construction sector is treated

in a low priority by most of the financiers in Sri Lanka. Presently 95% of Construction

Contractor population is represented by these S & M categories. Due to the risks associated

with the industry and frequently reported delays in payments by the clientele has been a bane

to the expected growth in this sector. Urbanization followed by scarcity of lands for housing

is another burning issue dealing with basic needs of the population.

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2.1 Human Resource Requirement and its Contribution to the Industry

2.1.1 Background

Construction industry contributes 7 per cent to the total of employment out of an average

contribution of 27% to the whole industry sector. As of 2013, the direct employment in the

construction industry was half a million persons. This included four categories of employees :

professional (consultants, engineers), technical (supervisor, foremen), skilled craftsman

(masons, carpenters etc) and tradesman (Construction machine operators, mechanics). They

are supported by the unskilled workforce. Almost 97 per cent of total persons employed were

males with 75 per cent falling in the 25-45 age-group. 52 per cent were with experience of

less than five years.

Much investment has also been committed by the stakeholders to update technology,

capacity, resources in production, processing and distribution, including improving the

quality and skills of the construction labour force.

A national strategy to develop human capital for the contemporary construction Industry

looking for high levels of skill is a demanding task. In order to popularize the attraction to the

trade the public and private sector education and vocational training institutions have to

modernize their training to acceptable levels to meet these emerging requirements. In order to

achieve this, specially the craftsmen segments of NVQ level 3 & below, the Government has

a programme to work in partnerships with industry and training providers. It is aimed at

working towards a common goal by formulating and implementing policies in consultation

with all stakeholders, and regulators to establish a quality assured and labour market oriented

system that fulfils socio-economic goals of Sri Lanka.

The Government’s development policy statement “Mahinda Chinthana - Vision for the

Future” spells out its intention of expanding and improving quality and relevance of

vocational education system by capacity building and upgrading training facilities. Two key

policy objectives related to Vocational Training in this important Policy document are :

(1) Increasing enrolments in Vocational training institutions (increase enrolment rate of

public training institutions to 20% by 2013 and 30% by 2016), and

(2) Improving operational and managerial efficiency of such institutions dedicated for

training.

According to the 2013 Labour Market Information Bulletin (LMIB) published by the Tertiary

and Vocational Education Commission (TVEC) of Sri Lanka, 66.5 % of unemployed

population is without any vocational training. In numbers it amounted to 229,161 in that year.

According to the same TVEC reports, the job demand in craft & related work categories in

the Construction Sector recorded a substantial 3.3% , amounting to 3590 from a total demand

of 107,698. In comparison, the demand of same level craftsmen indicated in second and third

places which represented by Manufacturing and Leisure sectors, recorded figures as low as

2.1% and 2.2% respectively. Therefore the policies and strategies to meet this increasing

trend shall include plans to enroll school leavers and other youth who are presently attracted

to non productive segments.

Foreign employment placements in two major craftsmen categories of Masonry Technician

and Electrical Technician have come down considerably recording more than 40% drop

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mainly due to the increased demand in the local scene. In 2013 foreign job placements for

Mason, Plumber & Electricians were less than 25% of orders showing a strong local demand.

As a promotion to attract more and more youth to the industry, a national rewarding scheme

themed “Mahabhimani” has been arranged beginning from year 2013, by the Ministry of

Construction, Engineering Services, Housing and Common Amenities of Sri Lanka, along

with the industry regulating body Institute for Construction Training & Development

(ICTAD) and National Construction Association of Sri Lanka. It was started with the goal of

promoting youth from island wide to enter into the industry and encourage skills

enhancement among construction workers, who are already in the trades.

The GOSL along with its Vocational Training arms, has identified a set of occupations that

need to be developed in the country for smooth functioning of the industry. In fact, there are

several new occupations that have emerged and need skill training to be developed for better

servicing of the industry and since such skills are presently not available in the country. It can

be clearly observed there is huge demand for construction craftsmen and present supply does

not cater to rising demand. This situation has aggravated to such an extent that labour

importation seems a viable option.

Increased Annual Demand for Construction Craftsmen from 2011 to 2016, as per the

Technical, Vocational , Education & Training (TVET) plan of TVEC for the year 2007, can

be predicted as below. This illustration can also be used to identify the popular categories and

their degree of involvement in the industry.

Occupation Year 2013 2014 2015 2016

Masons 4,763 5,001 5,251 5,514

Carpenters 2,363 2,481 2,605 2,735

Plumbers & Pipe Fitters 762 800 840 882

Electricians 707 742 779 818

Bar Bender & Steel

Fixers 361 379 397 417

Painters 399 419 440 462

Tile Layers 399 419 440 462

Scaffold Fixers 180 189 198 208

Plasterers 1,347 1,415 1,485 1,560

Concrete Workers 1,936 2,033 2,134 2,241

Shuttering Workers 11 12 12 13

Aluminum Workers 31 32 34 36

Total 13,258 13,920 14,616 15,347

2.1.2 Foreign Demand for Skill Construction Craftsmen

Data collected from Sri Lanka Foreign Employment Bureau on the vacancies received from

foreign countries (demand) for construction industry craftsmen and the departures to accept

those vacancies (supply) shows mix results during past few years. In some cases the demand

for construction sector employees increased heavily, while some segments decreased.

However the demands have not been met in any segment during the past.

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2.1.2.1 Vacancies and Departure on Construction Craftsmen Abroad

Occupation 2010 2011 2012

V D V D V D

Bar Bender 197 124 108 10 217 95

Building

Carpenter

626 166 1690 344 740 227

Carpenter –Joiner 4896 1349 1688 373 69 13

Carpenter

Shuttering

1570 362 1447 171 701 75

Building

Electrician

221 39 452 208 270 65

Plumber - - 621 70

Mason-General 7564 2333 5211 1013 3173 602

Mason-Tile Fixer 1625 683 835 328 419 73

Scaffolder 231 18 487 16 200 61

Painter-Building 238 42 145 51 187 101

Total 17,168 5,116 12,599 2,585 5976 1312

(Source: SLBFE, 2012)

To satisfy this new and further training needs, public and private institutions should work

hard and achieve expected goals. In addition to the local requirement, there is a foreign

demand for construction workers, which amounts to an average of 15,000 annually.

2.1.3 Recommendations to develop Human Resource Capabilities and Capacities in

the Construction Industry

2.1.3.1 Promote and Enforce Use of Skilled Labour

Productivity, quality, sustainability and innovation are becoming driving forces for the Sri

Lankan construction industry. Hence, development of human resource capabilities has

become a necessity. Labour intensiveness and current practice of employing unskilled labour

has restrained productivity growth in the sector. Low wage rates in the industry have reduced

the incentive to use new construction technology and methods. Thus, in order to enhance

productivity and performance, it is necessary to promote and enforce the use of skilled

labour.

TVEC in association with the Skills Development Project (SDP) funded by the Asian

Development Bank (ADB), introduced the national certification system for the TVET sector

of Sri Lanka, which is called the NVQ framework with effect from January 2005. The prime

objective of NVQ framework is to facilitate the manpower skill development in the industry.

Meanwhile, the global demand for skills and training has continued to rise, reinforcing the

role of productivity and innovation as key determinants of long term, international

competitiveness. Several scholars have identified positive correlation between labour

productivity levels and skill intensity in studies conducted to highlight the linkages between

skills, innovation, and productivity. The findings have also highlighted that experienced

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employees and fresh graduates were key drivers of innovation. By promoting the use of

academically qualified professional team and skilled labour force, the Sri Lanka construction

industry could improve its image, which would make it easier to attract more qualified

professionals and skilled workers to raise performance of the industry. An improvement of

general skill levels in the industry will further increase the likelihood that new technologies

and methods will be adopted and this would strengthen the industry's competitive position.

Many countries including UK, USA and Singapore have also stepped up their efforts in

promoting the skill levels and encouraging "multi-skilling" of their construction workforce.

The Sri Lankan construction industry can promote the use of skilled labour by adopting

following approaches to human resource development;

Assessment of the human capital need,

Initiate skill development, training and education,

Encourage continuous skill development programmes.

2.1.3.2 Assessment of Human Capital Need

ICTAD can play a vital role in information gathering and analysis for the assessment of

required skills by collaborating with professional bodies, industry associations and

contractors. It is necessary to conduct a comprehensive assessment of the industry's present

and future needs. Results of the study would be stored in a skills database managed by

ICTAD. A forecasting mechanism must also be developed to predict skill requirements based

on proposed future development projects.

2.1.3.3 Skill Development, Training and Education

ICTAD can use NVQ framework in developing skill standards for the construction industry.

Human resources for the construction industry formally acquire competencies by attending

training courses conducted by organizations such as ICTAD, Technical/University Collages,

NAITA, to name a few. However, in order to ensure the quality of training and enhanced

performance, there is a need to establish a construction training academy under ICTAD to

develop trainers, monitor training centers and to conduct research in collaboration with

national universities.

Individuals entering the construction industry would be required to equip themselves with the

required competency levels to perform a particular trade. These skills and knowledge can be

acquired from various ICTAD accredited training centers. It is, therefore, important that a

standard training curriculum is developed for these training centers to produce a competent

workforce for the construction industry.

Another means of encouraging human resource development in the industry is to make it

compulsory for construction companies to take in qualified apprentices and skilled workers.

Further, ICTAD can include this requirement into contractor grading mechanism.

2.1.3.4 Encourage Continuous Development Programmes

In addition to the competency acquired, the practice of continuous development for

construction workforce at all levels should be emphasized as continuous improvement in their

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skills and knowledge is necessary to keep abreast of the latest technology development in

construction.

2.1.3.5 Nurture the Desire to Work in the Construction Industry amongst the Local

Workforce

Nurturing a desire amongst the local workforce to enter the construction industry is

imperative for the survival of the industry. The current reliance on unskilled labour cannot be

sustained given the future direction of the country.

The government recognized that in order to sustain economic growth, increased international

competitiveness, and to meet the objectives of Mahinda Chintana – The Way Forward, it

must pursue the development of a knowledge hub. The construction industry needs to move

away from traditional methods and promote new construction technologies and practices. The

knowledge and skill sharing with foreign workers is also identified as a method of enhancing

the skills of the local workforce.

The impact of a potential skill shortage is a severe issue which is not unique to the Sri Lankan

construction industry. Difficulties in meeting client requirements on time and loss of business

to competitors due to lack of labour force and skill shortage, were highlighted by many

construction companies. Currently, the construction industry experiences a boom where

companies find it difficult to find required labour force to satisfy the demand. Frequent hiring

and training of workforce adds a heavy burden on the industry.

Improving the attractiveness of the industry will help sustain human resource capacity by

improving human capital retention. If the industry can successfully improve the image of the

industry to attract more local workforce, it can also address the issue of skilled human capital

retention. Improving the industry image and sustainability will help to retain this critical

group of workforce.

A potential candidate can enter the local construction industry as an unskilled, semi-skilled or

skilled worker. The following recommendations will focus on attracting workforce for the

local construction industry.

2.1.3.6 Target Potential Workers during Tenure in Schools One of the main sources of labour for the industry will be new entrants, those who have just

completed secondary education. The industry should target this group before they complete

their schooling. Targeting potential workers during their tenure in schools will help to

increase the likelihood of them joining the construction industry.

Focused efforts to promote the construction industry to this group of potential workers would

include participation in career fairs, exhibitions and direct contact at schools along with an

intensive nationwide advertising campaign. A comprehensive promotional programme is

necessary to counter the perception of construction as a "Dirty, Dangerous, Difficult"

industry and also to promote it as a rewarding employment with attractive prospects. It is also

imperative to introduce a compulsory pension scheme as a retirement plan for the sector

allowing the employees to reap benefits at their feeble times.

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2.2 Construction Material Resource Requirement

Construction industry depends on mainly materials and equipment, labour, finance and time

constraints. Among above key performance factors, construction material available today

spread in a broad spectrum of varieties, specifications, standards and market prices.

Therefore, the diversity of the construction material industry is complex and difficult to

analysis. As per the survey carried out by Department of Census and Statistics on

construction industry in 2010 to identify the input, output and trends on construction

materials on various fields, (such as building, highway, bridge, water supply and drainage,

irrigation and land drainage and dredging and land reclamation) the sector's average value of

raw materials used with compared to the total value of contract is 21% for the year 2010.

That means approximately 21% of contract value is spent on construction materials.

However, it reflects only the information gathered from contractors registered with ICTAD.

2.2.1 Share of Foreign suppliers for construction materials

It is revealed that value of cement used by the Building industry is higher than the other

sectors and Road sector which had used sand, rubble and metal has high total value with

compared to the other construction sectors. Expenditure for construction materials used by

highway sector is higher than all the other sectors and it is 47% of total expenditure for

construction materials used by the construction sectors.

Table 2.1 : Construction Material Imports

However, the ability to fulfill the construction material demand in the industry is not supplied

by the local industry. Only a certain percentage of total construction materials is produced in

Sri Lanka and the cost of construction material imports during the last 5 years is shown in the

Table 2.1.Growth in government housing programmes was also reflected by the movement of

the import volume index of building materials which grew by 11.9% per cent. According to

the Table 2.1, the value of imports is about Rs Million 175,054 for the year 2013, indicating

that foreign importers have significant role in our construction projects and housing units.

Category Value in Rs Million

Year 2009 2010 2011 2012 2013

Building Materials 75,290 92,905 118,935 157,437 175,054

0%

10%

20%

30%

40%

50%

Highway Building Bridge Highway and drainage

Irrigation and land drainage

Other

Pe

rce

nta

ge

DISTRIBUTION OF RAW MATERIALS

FEILD WISE

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Chart 2.1: Distribution of raw materials according the value among the construction fields

Among locally manufactured construction materials, bricks, lime, sand, quarry products, soil,

asbestos sheets are the most important. There are relatively few large industries for

manufacturing construction materials in the private sector as well. However, the production is

not satisfied to fulfill the industry requirement. Cement, Asbestos Cement Products, Upvc

pipes, roofing sheets, electrical wires, sanitary fittings and paints are among products

manufactured by these industries. A part of the requirement is imported from countries such

as India, Pakistan or Europe. Especially, cement, Asbestos roofing sheets, Zn/Al roofing

sheets, Tiles etc.

Geographical conditions of Sri Lanka is basically supports for an economy based on

agriculture than the industrial oriented economy. Raw materials such as clinker, iron ore,

coal, limestone, silica and aluminum are not the indigenous resources found in Sri Lanka and

therefore a vacuum in construction raw materials is generated. However, it is required to

establish a equilibrium between the imports and use of local materials. As such, it is

necessary to increase the share in the consumption of indigenous resources based materials

produced in locally and using local raw materials and labour. Balance demand is assumed to

be imported. This is a means of overcoming the foreign exchange constrains that operates on

the construction sector. This strategy represents an integrated and balanced approach to the

utilization of resources available in a developing country diverting to a practice of both

labour and capital intensive techniques.

Chart 2.2 : Variation of price of cement

Chart 3: Variation of price of important material prices

700

800

900

1000

2009 2010 2011 2012 2013 2014

Rs

VARIATION OF PRICE OF

CEMENT (50 Kg)

Cement (50 Kg)

60

80

100

120

140

160

2009 2010 2011 2012 2013 2014

Rs

VARIATION OF IMPORTANT

MATERIAL PRICES

R/F Steel (1Kg)

Fuel (Auto Diesel) (1Ltr)

Lime (Dolamite) (100Kg)

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Chart 2.3: Variation of price of other important material

Chart 2.4: Variation of price of river sand

Production of construction material has been inadequate due to a number of constraints.

Procurement of various inputs including raw materials, fuel and finance for production is

problematic. Due to competing uses, availability of fuels like coal, firewood or straw and

high price of electricity is becoming a serious constraint. In urban areas, industrial space for

storage of raw materials and the stipulated guidelines are critical issues.

As per the Chart 2.2 & 2.3 price of cement and other related construction materials have

recorded a continuous increase over the last decade. In the year 2009, the cement price was

around Rs 750.00 and for the year 2014, it is recorded as Rs 950.00. However, with the burst

of the global commodity price and general slowdown in the economic activity have been

occurred and the prices have been stabilized during the last two years. Therefore,

construction sector could be expected to benefit from stabilized price levels in the short term.

As of June 2013, the price of a cube of sand was over LKR 11500.00 and the price of a cube

of river sand can be sold up to LKR 15000.00-17000.00 in certain instances. The heavy rain

and the swelling of waterways have made sand mining difficult and prices to escalate. This

can be clearly seen from the Chart 2.4.

In addition to that the new products may be considerably more expensive than the traditional

materials in comparable usage. Economic evaluation is not conducted properly. At the same

time, the labour cost also makes a high impact on the production process which has been

significantly increased during the last 3-4 years.

2.3 Technology Resource Requirement

The context of the built environment is becoming more complex and therefore, quality

management in a construction project is of utmost importance to upgrade the architectural

appearance, improve safety and durability of the building and to ensure user compatibility. In

terms of safety, structures should be able to withstand both natural and manmade disastrous

situations. Good built space for living, working and other activities is of high demand.

River sand (cube)

7500

8500

9500

10500

11500

2009 2010 2011 2012 2013 2014

Rs

VARIATION OF PRICE OF

RIVER SAND(cube)

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Increasing treats to natural environment need more attention. Time, quality and cost are

becoming key factors in the any production cycle including in the construction process. The

final product has to fulfill the needs and aspirations of the user to occupy the building without

any difficulty.

Current situation of Technology transfer on quality management and modernization efforts

must show respect for national development, employment and income redistribution

strategies. There had been little change in the existing technology as well as little success

with attempts to modernize made by the relevant authorities, in pursuit of the technology

transfer with compared to global technology. Among major short comings is lack of

investment, non availability of suitable plant and equipment at an affordable cost and

insufficient training programmes for both personnel of the promoting institutions and the

managers and craftsmen of these enterprises are significant.

ICTAD as the government body to standardize the construction industry has introduced many

number of specifications for various construction fields. Specially, buildings, highways and

water supply etc. But, there is a requirement of developing specifications for construction

requirements such as construction materials and components and construction work.

Sri Lanka Standards Institution (SLSI) is a key institution in Sri Lanka, under its

responsibilities to develop and implement standards for manufacturing sector including the

construction industry. SLSI has standards for construction materials as well as on

measurements in construction industry. Institutions like Urban Development Authority

(UDA) in Sri Lanka, is responsible for physical development and plays a key role in this area

in urban context in construction of buildings and surrounding environment. However, despite

of all standards available, there are many numbers of forged, poor quality construction

materials and components in the market. Therefore, there is a national need of formulating a

quality controlled construction material manufacturing/import industry and building codes in

order to develop and improve quality standards of construction sector in Sri Lanka. For this,

building codes covering all the aspects of the industry such as design, construction,

maintenance etc. would be much useful in achieving the desired results in the act of building.

The construction industry of Sri Lanka is extremely in need of information for more effective

and efficient out comes. Levering on information would enable the construction industry to

improve its performance achieved by numerous other industries. Therefore, the construction

industry needs a single point of access to all information, a 'knowledge hub' relevant to the

industry very soon to compete with the global parallel competitors.

2.3.1 Technology as a resource for proper waste management in the Construction Waste management has been a number one attention of in any industry with the scourge of pollution

and recent global climatic and ecological concerns affecting the whole environment, setting no

boundaries for destruction. Waste is, to a certain extent, inevitable on construction sector and this is

an additional cost involved in construction. Further it creates an economical and environmental harm

and health issues. In general, it is found that the wastage of important construction materials

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such as cement, lime etc. are as follows ;

Chart 2. 5: Composition of Demolition Waste in Sri Lanka

A huge quantity of construction material is being wasted during the processes of demolition,

delivery, stockpiling, cutting and fixing. Sri Lanka does not have regulations specifically

designed for construction waste disposal. Even the general regulations devoid of penalties/

incentives. Therefore, implementation of these regulations has many number of barriers.

Further, there is no identification of land spaces for waste, disposal charges, disposal factor

and percentage of waste with compared to construction cost.

The concern of recycling the waste in cities particularly in Colombo Metropolitan Regions is

very high. Further, in Sri Lanka there is no proper Guidelines stipulated by the Municipal

Councils on recycling and depositing. Therefore it is of paramount importance to tap

technologies such as Crushing and reusing that are already being implemented in the

neighboring countries. Since China and South Korea have been venturing in many projects

here in Sri Lanka, focus shall be made on agreements on transferring such mechanisms at

reasonable costs or as part of the overall funding structure.

2.4 Financial Resource Requirement

Poor availability of funds remains a serious concern for the industry. ICTAD as the

government apex body to regulate the construction industry implements a process of grading

construction contractors and according to several industry experts, the important reason for a

majority of the contractors to remain below the boundaries of C1-C3 grades are poor access

to sources of funding. The Chart 2.6 shows the number of registered contractors with respect

to the grade as at 30th

September 2014. It can be seen that the number of contractors

registered under Grade C7 is 1208 who have the financial strength that limited to Rs 1.0 M.

Even for Grade C6, the number of registered contractors is 444 which the financial capacity

is only Rs 2.0 M.

Concrete, 7.60% Timber, 1.56%

Asbestos, 1.17%

Ceramics, 0.94%

Plastic, 0.40%

Bricks, 27.54%

Cabok, 30.68%

Earth/Clay, 2.58%

Steel, 0.06%

Mortar, 14.13%

Glass, 0.01%

Wires, 0.21%

Clay Tiles, 1.08%

Mixed Waste, 12.03% Concrete

Timber

Asbestos

Ceramics

Plastic

Bricks

Cabok

Earth/Clay

Steel

Mortar

Glass

Wires

14

Chart 2.6 : No of Registered Contractors with ICTAD

This is because many of the large scale construction projects are Government initiated and

many contractors often face delays in receiving payment from such projects. As a result, the

sub contractors and other entities face financial difficulties, which adversely impacts

suppliers of materials and ability to scale up. Payment concerns needs to be addressed by

arranging specialized financial assistance aiming at development of the industry.

Chart 2.7: Distribution of value of construction work by the sector

As per the Central Bank Report, 2013 it is noted that private sector involvement in housing

development projects was reflected by 9.1% growth in loans and advances for the housing

sector by commercial banks while the public sector was also involved in housing

development projects such as 'Jana Sewana' housing programme focusing more on rural

housing development.

0

10000

20000

30000

40000

50000

60000

70000

Private Public

Rs.

M

Sector

Value of work done by sector - 2010

50 36 62147 208

444

1208

290

81 25

C1 C2 C3 C4 C5 C6 C7 C8 C9 C10

Grade Vs Number of Registered Contractors

15

Land acquisition is a preliminary task in construction related development projects. Specially,

for proper highway network, to expand the existing roads and construct new roads, highways

and expressways, private lands in both sides of the roads are to be acquired. However, a

number of projects have been delayed on account of delays in acquisition of land and other

issues of resettlement and rehabilitation. In addition to that finding lands for Housing in

urban areas is a challenging task. At the same time metropolitan areas such as Colombo 01,

where there are many State & Private sector enterprises, including warehouses that date back

to the island’s former Colonial era when the lake was used to transport goods from the

Colombo port, has been identified as a night-life tourist spot, under the Colombo City

beautification programme. Meanwhile, the Galle Face area of Colombo 02 has also been ear-

marked for further tourism development . Therefore, within Colombo suburb area the price of

a perch of a land varies from LKR 900,000.00 - 13,500,000.00.

Therefore, It is required to obtain the maximum support of the public for acquiring lands

without delay in order to develop roads. To minimize the loss by granting a fair

compensation for the acquired lands is a key function here and proper mechanism of handling

such grievances should be established in order to minimize the delay in at least large, loan

based infrastructure projects proposed.

It is estimated that the construction investment on urban development and housing in the year

2015 would be LKR. 150 Billion. Out of this only 32% would be provided by the government

and it is assumed that the balance would be undertaken by the private sector. Therefore,

foreign investments are considered to be vital in securing a sustainable growth in the sector. It

is required to introduce attractive incentives and conducive policies while development

policy regulations and approval procedure should also be streamlined for this sustenance.

During the next five years period, in Power, Roads, Ports and Transportation sectors, there is

an investment requirement of LKR 3226 Billion. The projects are expected to be funded both

by the government and foreign development partners. It is estimated that Sri Lanka needs to

build 100,000 houses per year nation-wide until 2020 to cover the housing demand.

3.0 Recommendations & Conclusion

In order to have sufficient human resources for future needs, the construction industry must

collaborate with academic institutions to revitalize interest in construction-related courses.

The construction players can work with academic institutions to enhance the curriculum in

construction-related fields. This can be done by updating the curriculum to make the material

taught and skills learned more relevant to the industry needs. A coordinated effort should be

undertaken by ICTAD to establish a formal dialogue with academic institutions to establish

and revise the relevant curriculums. Skilled plant and equipment operators and skilled labors

are increasingly sought after by foreign construction companies severely impacting the

current local workforce. Therefore, it should to be taken into consideration the need to

produce more professionals and skill workers considering the skill migration to foreign

construction industries. In addition, a mechanism to attract women to skilled trades such as

electrical and plumbing needs to be considered since demand in the garment industry is

diminishing. The construction industry could further boost exposure to working in the

industry by encouraging industrial placements (internships) for students. On the job training

should be considered for skilled based trades. By encouraging industrial placements,

companies can better ensure trainees will acquire specific skill sets that enhance their value

for employers.

16

Regulation mechanisms in construction material supplies will ensure stability in upstream

and downstream channels in the total supply chain. GOSL, along with its regulating arm

ICTAD, shall introduce a Material Supplier registration system, in order to monitor this vital

segment. Initially this scheme may be introduced as a voluntary mechanism, which can be

promoted to be attracted by suppliers. As a penultimate marketing strategy, the outcome

could be used for further strengthening of the system.

Boosting of FDIs and bilateral agreements of Technology Transfer mechanisms in funded

projects will be the key success factors of strengthening the technology resource

enhancements. Sri Lanka should use the maximum opportunities and obtain these benefits

through the upcoming mega projects such as the Port City Development and the Super

Highway Construction project.

Financing and providing adequate land for housing and other infrastructure projects are

identified as priority areas in the policy development framework of the government. In

keeping with these, the government should arrange a pathway to facilitate the construction

community with low interest loans, leasing systems, insurances and other tax concessions

with the aim of increasing number of investors in the field.